Crossley v Crossley [2007] EWCA Civ 1491

Application for permission to appeal, with appeal to follow, directions in ancillary relief proceedings refusing a wife full disclosure on Form E on the basis that a pre-nuptial agreement had been signed, in a short childless marriage, that stated that neither party would bring any application for financial provision. Application allowed but appeal dismissed.

The couple had both brought substantial wealth into the marriage: the husband's was estimated at £45m and the wife's at £18m. They had signed a pre-nuptial agreement before marrying in January 2006. They separated in March 2007, the wife petitioned for divorce in August 2007 and issued a Form A in September 2007. This was challenged by the husband on the grounds of the pre-nuptial agreement, but counsel for the wife claimed that the husband had not disclosed assets that formed the basis of the agreement so there was a need for disclosure on Form E. At a hearing in October Bennett J directed that the wife's solicitors should merely write a letter setting out full reasons for requiring disclosure.

At this appeal counsel for the wife argued that the judge was plainly wrong in finding that the overriding objective in Rule 2.51D permitted him to ignore Rule 2.61B and that the FPR were mandatory. In dismissing the appeal, Thorpe LJ described the facts of the case as exceptional and added that "if ever there is to be a paradigm case in which the court will look to the prenuptial agreement as not simply one of the peripheral factors in the case but as a factor of magnetic importance, it seems to me that this is just such a case". He also rejected the argument that the judge should have been forced to allow disclosure as the rules were not intended to be a "straitjacket precluding sensible case management".

Lord Justice Thorpe:1. Mr Howard QC, leading Ms Wilkins, brings this application for permission before the court on behalf of the wife, who is locked in ancillary relief proceedings with the husband. The papers suggest that the husband is a 62 year-old property developer who has an independent fortune which he declared to be in the order of £45 million in December 2005. The wife, who is some 50 years of age, at the same date declared her fortune to be worth, I think, some £18 million.

2. The parties had met in about June 2005 and became engaged in September 2005. Thereafter there were negotiations between experienced lawyers to settle the terms of a prenuptial contract. This seems to me to have been an entirely appropriate step for the parties to take. The husband had been married once before and had had a long-term previous relationship, and had four children as a result. The wife had been three times previously married and had three children from those previous marriages.

3. The prenuptial agreement was signed on 16th November 2005 and its terms were recorded in the judgment of Bennett J which we are this morning reviewing. He said:

"The critical part of the premarital agreement is in Article 8, which is to the effect that both of them should walk away from the marriage with whatever they had brought into it. That may be a rather inaccurate way of putting it but that is broadly what it amounts to. At 8.3(c) it says:

'Neither party shall apply to any court in any jurisdiction for any order for financial provision of any kind based on the marriage of Stuart and Susan…'"

The marriage was celebrated on 5th January 2006 and seems to have brought little or no happiness to either of the parties. By the month of March 2007 they had separated, and on 15th August 2007 the wife petitioned for divorce.

4. On 11th September 2007 she issued a Form A, which is the preliminary step that a petitioner may take to pursue her claims for financial provision. The effect of such an issue on 11th September was to trigger a date for the exchange of Form E's -- 7th November. Questionnaires and other documents would then have to be exchanged on 28th November and there would be a first appointment before the court on 12th December. Plainly that was a development that was not going to go unchallenged, given the terms of the prenuptial agreement, and on 20th September the husband issued a summons, which sought by its first paragraph an order that the wife show cause why her claims for ancillary relief should not be resolved in accordance with clause 8 of the premarital agreement entered into by the parties. Paragraph 2 sought consequential directions including transfer to the High Court and the vacation of the automatic timetable flowing from the issue of the Form A.

5. That was the summons that came before Bennett J on 30th October. At that date the husband was represented by Mr Lewis Marks QC and Mr James Ewins. The wife was represented by Mr Philip Moor QC, who had settled a skeleton argument eloquently elaborating her case in resistance to the husband's application. There was an equally full submission in writing by leading and junior counsel for the husband, and accordingly Bennett J had an opportunity to consider the relatively short procedural point that was before him for decision. He said at the outset: -

"MR JUSTICE BENNETT: Thank you both for your summaries and your skeleton arguments. Do you want to hear what I have got in mind?

MR MARKS: My Lord, certainly.

MR JUSTICE BENNETT: I think Form Es should be completed without documents, without questionnaires, and in the Form Es it can be explained why the prenuptial agreement is or is not what I would call a knockout blow. The first appointment will be adjourned to the hearing in front of the High Court Judge hearing the application of Mr Marks."

6. That proposal was clearly acceptable to Mr Marks. Mr Moor then sought to dissuade the judge from his preliminary approach. He said that his case was that the matter could not be dealt with as a preliminary point, to which Bennett LJ responded:

"You can argue that out in front of the Judge in February."

7. Mr Moor went on to state that an important plank of his case was that the husband had not made full disclosure of the fortune upon which the prenuptial agreement had been negotiated. He said specifically:

"We are asserting non-disclosed assets in Andorra and Monaco."

8. In relation to the first point Mr Marks in reply was quite specific. He said:

"…we are not suggesting for a moment that a judge would simply reach a conclusion, without regard to the other s.25 factors, that this claim should be dismissed. Our contention will not be that there is an agreement and, there, that is the end of it. It will be, as we have made, I thought, very plain in our document, that there is an agreement and, in all the circumstances of the case, the wife should be held to it because it is a short childless marriage, where both parties are independently wealthy and where neither of them have made any significant monies during the course of this marriage."

9. Mr Moor had pressed for conventional delivery of questionnaires, so that he might develop the case that there were very substantial concealed assets in Andorra and in Monaco. The judge's solution was to direct, as we see from paragraph 15 of his judgment, that Mr Tooth, who acts for the wife, should write a detailed letter as soon as possible to the husband's solicitors setting out the wife's case on non-disclosure to be answered by the husband in his Form E. He continued: "It seems to me that even having heard Mr Moor's persuasive submissions I should adhere to that which I provisionally proposed to counsel at the beginning of this short hearing."

10. So matters ended on 30th October, and on 8th November the letter directed by paragraph 15 was written and it was supported by some documentation that demonstrated payments out from an account in Andorra. The husband had, through the lips of Mr Marks on 30th October, accepted that there was such an account in his daughter's name over which he had powers of withdrawal, and he had accepted that there was some account in Monaco which had been used in order to defray charges relating to the use of a yacht. So it hardly seems to me that the delivery of the letter of 8th November opened any major areas for judicial investigation: but that is only a superficial view and a profounder view will have to be taken by the judge who takes the case on 13th February.

11. The appellant's notice challenging the case management of Bennett J was filed on 14th November, and on 19th November Wilson LJ directed an oral hearing of the application on notice, with appeal to follow if permission granted. The grounds of appeal are fourfold. One, that the judge erred in law in directing that the respondent's summons of 20th September be heard as a preliminary issue. Two, the learned judge erred in law in failing to apply the family proceedings rules to the petitioner's application, given that the rules are mandatory. Three, that he was plainly wrong in finding that the overriding objective in Rule 2.51D permitted him to ignore Rule 2.61B. And finally, that he was wrong to prevent the petitioner from filing a questionnaire, thus precluding her from challenging the respondent's disclosure in circumstances where she alleges that the respondent was guilty of substantial non-disclosure at the time of the signing of the prenuptial agreement.

12. Mr Charles Howard QC has prepared a skeleton argument for the purposes of this hearing and it is, as it were, in supplement to the skeleton argument that had been settled by Mr Moor on 8th November in support of the appellant's notice. So in a sense we have the combined wisdom of Mr Moor and Mr Howard for the wife, and the combined wisdom of Mr Marks leading Mr Ewins and Mr James Turner QC leading Mr Deepak Nagpal for the husband. In his oral submissions Mr Howard has advanced seven points which are essentially elaborating the four grounds of appeal. He says that first the judge should not have set up a hearing at which the preliminary point taken by the husband might be decided in his favour. He says so to do would effectively be the ouster of the jurisdiction of the court and the court's obligation to carry out its own investigations and to apply all the criteria contained in section 25 (2) of the Matrimonial Causes Act 1973. He further argues that preliminary issues can only be ordered if they are confined to the determination of an issue of hard fact, as is well illustrated by the practice established in the case of OS v DS.(Oral Disclosure: Preliminary Hearing) [2005] 1 FLR 675. They should not be used where the objective is to determine what weight is to be given to an individual fact within the statutory criteria. That submission, he says, is supported by the authority of Smith v Smith [2000] 3 FCR 374 and by the decision in the case Hill v Morgan[2006] EWCA Civ 1602, to which My Lord, Lord Justice Keene and I were parties. He particularly stresses that if there was to be any early valuation of the impact of the prenuptial agreement, full disclosure was a necessary prerequisite. Here there was an obvious risk of a determination against his client without any documents, questionnaires, valuations, section 25 affidavits or oral evidence. At a minimum nothing should have been elevated for decision without, or in advance of, a fully prepared first appointment.

13. Then Mr Howard has elaborated the submission, which was well made by Mr Philip Moor, below that the provisions of Rule 2.61 are emphatically mandatory. Time and time again the language of the rule is that the judge "must", and that is in contrast to a very limited allowance of discretion that results from either the use of the word "may" or the addition of a phrase such as "unless the judge otherwise directs". Mr Howard has met the consideration of the overriding objectives within the rules forcefully, by saying that the use of the overriding objective cannot preclude or shorten the essential preparation of the core material necessary to enable the judge to deal with the first appointment. He suggests that what Bennett J has ordered, far from shortening the process and saving costs, will have the reverse effect, because on 13th February a foreseeable if not an inevitable outcome is that the judge will have to adjourn the first appointment for the supplement of all that Bennett J has excluded.

14. Now Mr Howard has argued his case very forcefully and skilfully, but he has failed to persuade me that there is any weight in any of the four grounds advanced. They are very cogently answered in the respondent's skeleton argument, which Mr Marks and Mr Turner have framed to meet each of the four grounds of appeal individually. In relation to the first ground Mr Turner has submitted that the judge plainly did not direct the husband's summons to be heard as a preliminary issue. That, I think, is incontrovertibly correct. Mr Turner accepts that the court must conduct the section 25 exercise by reference to all the statutory criteria. He accepts that the existence of the agreement cannot oust the court's obligation to apply section 25. He accepts that a prenuptial agreement is one aspect of the case. However, he emphasises that this is a childless marriage of very short duration, for a substantial portion of which the parties were living apart. The marriage was between mature adults, both of whom had been previously married and divorced; both parties have and had prior to the marriage very substantial independent wealth. The prenuptial agreement provides for the retention by each of the parties of their separate properties and division of joint property if any, and finally that there is no such joint property. Upon those facts Mr Turner, correctly in my view, adds that the combination of these factors gives rise to a very strong case that a possible result of the section 25 exercise will be that the wife receives no further financial award.

15. All these cases are fact dependent and this is a quite exceptional case on its facts, but if ever there is to be a paradigm case in which the court will look to the prenuptial agreement as not simply one of the peripheral factors in the case but as a factor of magnetic importance, it seems to me that this is just such a case. As to the second and third grounds that the judge was bound by the provisions of Rule 2.61, I am quite unpersuaded, as was the judge, that these individual rules were intended to be some sort of straitjacket precluding sensible case management. I would particularly stress the overriding objectives that govern all these rules, carefully and fully drafted in Rule 2.51D. It is easy to attach this case on its facts to a number of the objectives there articulated. It is very important that the judge in dealing with the case should seek to save expense. It is very important that he should seek to deal with the case in ways proportionate to the financial position of the parties. It is very important, more so today than it was when these rules were drafted, that he should allot to each case an appropriate share of the court's resources, taking into account the need to allot resources to other cases. In his general duty of case management he is required to identify the issues at an early date and particularly to regulate the extent of the disclosure of documents and expert evidence so that they are proportionate to the issues in question.

16. Finally in relation to ground 4, the assertion that the judge prevented the petitioner from filing a questionnaire, Mr Turner quite rightly points out that that inhibition was not designed and did not have the effect of preventing the wife from raising her assertion of material non-disclosure; he simply provided an alternative mechanism, namely the stating of the case in a swiftly written letter which would then be answered by the husband in his Form E.

17. So I have found the skeleton submitted by Mr Turner to be a completely persuasive document. To that extent we have not called on him for any oral argument. Bennett J's management of this case in the orders which he made, so far from being questionable in my eyes, seem to me an admirable illustration of judicial initiative and good sense. Mr Howard has submitted that his client has effectively been denied access to the London court. She has been denied the right to advance her claims for financial provision. I simply cannot so regard the prenuptial agreement, and the actions that she has taken demonstrate that it has not that effect. The orders that have been made to date demonstrate that it is not being given that effect by a court. I would classify, in the circumstances of this case, the contract into which the parties entered in December 2005 as in many respects akin to a marital property regime into which parties enter in civil law jurisdictions in order to provide for the property consequences of a possible future divorce. It can be categorised as something akin to a contract for the separation of goods within the French legal system. It does seem to me that the role of contractual dealing, the opportunity for the autonomy of the parties, is becoming increasingly important. As counsel have pointed out, the possibility of legislation for prenuptial contracts was raised by this government in I think 1998, and although the responses to the white paper consultation were few in number, there was certainly not in any way a disincentive to further progress. Since then Resolution has formulated a very convincing paper for the legislation of prenuptials, and much of the debate concerning possible reform of section 25 of the Matrimonial Causes Act has emphasised the opportunity for some statutory acknowledgment of the importance of prenuptials. There is in my judgment an even stronger argument for legislative consideration, given the resolution of the European Union to formulate some regulation to tackle the difficulties that arise from different approaches in the member states. There is an obvious divide between the provisions of the civil law jurisdictions and the absence of any marital property tradition in the common law systems. Undoubtedly there would be some narrowing between this European divide if greater opportunity were given within our justice system for parties to contract in advance of marriage, to make` provision for the possibility of dissolution. The approach that Bennett J took in this case seems to me to accord with a developing view that prenuptial contracts are gaining in importance in a particularly fraught area that confronts so many parties separating and divorcing.

18. For all those reasons I would grant permission only in recognition of the point made by Mr Turner in his skeleton argument that this case, although extremely uncommon on its facts, has some general importance, in that it demonstrates the discretionary power of the judge to require a party to show cause why a contractual agreement should not rule the outcome of an ancillary relief claim, not just when the contract is made post-separation and in contemplation of an application, but also when the contract has been made prenuptially or postnuptially but before the breakdown of the marriage.

19. I would therefore grant permission, but dismiss the resulting appeal.

Lord Justice KeeneI agree. If Bennett J's order prevented a consideration of the factors referred to in section 25 of the 1973 Act, one would of course be greatly concerned, but I do not accept that that is the position. Moreover, if the appellant can persuade the judge on 13th February that more information is required before such a consideration can take place, then that course of action is not ruled out by Bennett J's order. I note that at the very end of his judgment, at paragraph 16, the judge said this:

"The Form Es will stand, and each party must explain in the relevant section why the prenuptial agreement is of such great importance or, from the wife's point of view why it is not and that there should be a full investigation and a full hearing."

I emphasise those final words. That door, therefore, is not necessarily closed, but likewise such a course of action may not be the outcome. In the meantime the judge's order seems to me to be a sensible attempt to achieve the overriding objective, and having granted permission I too would dismiss this appeal.

Lord Justice WallI also agree. I would prefer speaking for myself to limit my decision strictly to the facts of this particular case. I regard it as an eminently sensible piece of case management by Bennett J. Of course it raises issues of importance and for that reason we give permission, but like my Lords I would dismiss the appeal.